All you need to know about NPCI Cap.
                     All you need to know about 
NPCI Cap On UPI Transactions
INTRODUCTION
Retail payments organisation, National 
Payments Corporation of India (NPCI), which 
operates the Unified Payments Infrastructure 
(UPI), in the country, said that it will issue a cap 
of 30% on transaction volume clocked by a 
player starting 2021.
Source: livemint.com
HOW THE CAP WILL BE CALCULATED?
The cap of 30% will be calculated on the total 
volume of transactions processed in UPI during 
the preceding three months. 
Source: livemint.com
THIRD PARTY APP PROVIDERS (TPAPS) 
The existing player or third party app providers 
(TPAPs) exceeding the specified cap, will have 
a period of two years from January 2021, to 
comply with the same in a phased manner.
Source: Business Standard
PROPOSED PLAN 
• NPCI first proposed the plan to limit the 
number or value of transactions in August 
2019. 
• It then said that payment apps will hit the 
limit if they exceed 50% of all UPI 
transactions in the first year of the 
implementation of the rules, 40% in the 
second year and 33% from third year 
onwards.
Source: Business Standard
PENALIZING PAYMENT FIRMS 
• In case of a breach of the mandated 
threshold, NPCI will start penalizing payment 
firms and banks, and ask them to stop 
onboarding new customers with immediate 
effect.
Source: bloombergquint.com
NEW GUIDELINES 
• NPCI is expected to issue new guidelines on 
market capping in the coming weeks, 
outlining on the workings of this decision.
• At present, no guidance is issued to players 
on how market-capping will work. But one 
can expect players to receive it soon. 
Source: livemint.com
WARNINGS 
• Mostly it seems like NPCI will trigger 
warnings to players currently holding more 
than 40% market share, asking them to limit 
market-share.
Source: livemint.com
WHO WILL BE AT LOSS?
• The move is expected to hurt payment firms 
including search behemoth Google’s, GPay 
(41%) payments app, Flipkart-owned 
PhonePe (42%) which command a total of 
83% market share as per October-figures, 
forcing them to limit their dominance in the 
UPI-payments segment.
Source: marketfeed.news
REVENUE MODEL 
• Indian payment companies have also been 
relaying to get back Merchant Discount Rate 
(MDR) for UPI, or the cost which is paid to 
banks and payment service providers 
(PSPs), during a transaction; leaving no 
revenue model for players to grow this 
infrastructure.
Source: livemint.com
NO MDR CHARGES
• There will be no MDR charges, which will be 
applicable, on RuPay and UPI platforms, 
causing NPCI to revise the interchange fee 
and PSP fee to zero for debit card payments 
through RuPay and for UPI payments in the 
country.
Source: livemint.com